By VC Bharati
Tamil Nadu is unique in many ways, politically, culturally and in people behavior. Cable TV Distribution is no different.
When the digitization of TV signals were announced and in the Phase I the Metro’s are covered, Chennai, the capital of Tamil Nadu alone did’nt go digital fully and CAS and Analog co existed. When multiple Private Enterprises were thriving in Cable TV distribution, Tamil Nadu had the unique distinction of Monopoly Distribution first in the hands of a Private Enterprise and subsequently by a Government Corporation. The bar for entry barrier has always been high for any New Channel owing to the monopoly in both the cases and has been the worst in the latter case.
Tamil Nadu, an advanced state in India, has almost all the villages electrified and so also connected with Cable TV homes. Nearly 98% of Tamil Nadu homes are connected to Cable and Satellite, the highest in India. Tamil Nadu spends highest time amongst the Indian states watching Television in any given week. It is in this state, the government has distributed more than 10 Million Television sets free of cost to its citizens. Besides, there are sops on electricity to households below poverty line and all the households get a subsidized electricity charges of a minimum of Rs. 500/- per cycle of billing.
History of Cable Distribution in Tamil Nadu:
Over the years the Distribution Scenario has seen several changes. A consolidation of Cable Operation started in the year 2001 from small operators into Network, particularly more urbanized parts of the state. The primarily the so called TAM towns were covered. This had ensured distribution of interested channels as the revenue of Satellite TV were principally through advertising. Having said this, the monopoly of distribution also made sure that the entry barrier was unsurmountable for the competitors.Broadcasters with deep pockets attempted breaking grounds and had gone back defeated until Tamil Nadu Government started its own cable TV operation as a welfare measure to the citizens of Tamil Nadu. The fortunes of the monopolistic private enterprises also declined unable to bear the heat of the Government Cable Company, TACT TV. However, it was like “frying pan to fire” for the broadcasters as there are no official channels available to negotiate carriage of channels in TACT TV, but was whimsical in its approach. The broadcasters were to be on the right side of the government to be placed in TACT TV network, more particularly, if the broadcaster were to be a News Channel.
When the distribution was in the hands of monopolistic private enterprise, the entry barrier was only the carriage fee. If the broadcaster so desires to absorb the cost of the distribution, however high or low, the channels could be placed and distributed without interruption. The same may not be said as true when it comes to government distribution network. It is still dependent on which side of the government the broadcaster is.
Major MSOs in Tamil Nadu:
With the digitization becoming a must before the end of December 31, 2017, many MSO’s have sprouted in Tamil Nadu with significant absence of the national players. The significant players in the market in the whole of Tamil Nadu and Pondichery are:
- Tamil Nadu Arasu Cable TV Corporation (TACT TV)
- Sumangali Cable Vision (SCV)
- Thamizhaga Cable TV Communication Pvt Ltd (TCCL)
- VK Digital Network
There are several small MSO’s who operate in Chennai and specific area of Tamil Nadu depending on their individual strength. A significant investment have been made by these MSO’s for the state of the Art equipment and encryption technology. Besides, since the government has promised free Set Top Box (STB) as their poll promise in a state known for welfare freebies, the pressure is on the Private MSO’s to heavily subsidize the STB’s.
Market Share of Various MSOs in TN:
The deadline for digitization fast approaching the LCO’s are crossing the fingers for the best of bargain with MSO’s. The Government Cable Company (TACT TV) has proposed to seed 7.5 Million STB’s and have so far reportedly seeded 0.4 million STB’s only so far. The task before the private MSO’s is humungous as there is a demand for huge investment and none of them have bottomless treasury. Given below is a table detailing the share of subscription (approximate and based on market enquiry and discussion with domain experts):
|S. No||Name of the MSO||Digital Connectivity||Analog Connectivity||Primary Area of Operation|
|1||Total Households in Tamil Nadu||17.5 Million|
|2||C& S House Holds||17.1 Million|
|3||TACT TV||0.4 Million||8 Million||TN|
|4||SCV||0.40Million||1 million||Chennai and Select Towns|
|5||TCCL||0.40Million||0.75 Million||Chennai and Select Towns|
|6||VK Digital||0.25 Million||0.4 Million||Chennai and Select Towns|
|7||Others||0.1 Million||2.9 Million||Chennai and Select Towns|
|8||DTH Penetration||2.5 million||TN|
With the TRAI regulation stipulating that no MSO can have more than 40% of share of a given territory, all the MSO’s will co exist in varied share of the market in Tamil Nadu.However, none is sure whether the deadline will be met and TN become totally digital with no analog signal from January 1, 2018. There are pending litigation too in Chennai High Court.
The revenue from subscription is likely to sky rocket for the pay channel broadcasters. Currently the Revenue share between Advertisement and Subscription may be placed in the ratio 60:40 and is likely to even out with the completion of digitization. The broadcasters have become aggressive on pricing and so also the MSO’s coming up with attractive packages to reach out to the Cable TV consumers and LCO’s alike. The operational costs of the MSO’s like the cost of the Head End, Fibre Bandwidth charges, pay channels charges etc., have to be met from the revenue from the subscribers and the carriage fee. With the pay channels not paying any fee for carriage it is the Free To Air Channels which have to bear the cost of operations of the MSO’s. As there is heavy competition on the ground to enlist LCO’s the MSO’s have to offer very lucrative deals to the LCO’s which cuts into their bottom line. The deficit is most of the time falls on the carriage fee by the FTA’s which depend solely on the revenue from advertisement only. The FTA’s have to be present as widely as it could be and as importantly in the genre cluster to garner viewership unlike the pay channels whose revenue is partly advertising and partly from subscription.
Exorbitant Carriage Fee, an entry berrier:
The MSO’s are mandated to charge carriage fee on RIO (Reference Interconnect Offer), however the carriage fee charged are arbitrary, though. It is no different with DTH platforms too. Typically a FTA channel who wish to broadband its presence in equally all the platforms have to shell out a sum not less than Rs. 200 Million per annum. The most affected are the solitary channels especially Free to Air News Channels and differentiated content TV Channels. The huge distribution charges and low advertising rates have resulted in deterioration of content quality with less money being available for content creation and other resources. Many a channels have looked up to north for content for dubbing. It is surprising and shocking with the second largest film industry in India looking for content from other parts of the country only on grounds of financial viability.
There was no substantial separate budget for News Genre for Tamil Nadu by the advertisers until recently. The News Genre advertising being estimated to be Rs. 1500 Million per annum, with more than a dozen Channel in the market, hardly a few of them break even. The significant deterrent for it is the humungous carriage fee.
The MSO’s do not appreciate the cost free content provided by the FTA’s as any value addition to their bouquet of offering to the subscribers even in an atmosphere of need to offer more number of channels at competitive price. Thus, the distribution platform strength overweighs the content strength and the FTA’s are forced to pay dis proportionate carriage fee resulting in accumulated loss year on air only to fold one fine day. It shall be prudent for the MSO’s to think that a support to the FTA’s are support to themselves in offering varied content to subscribers at almost nil cost.
In conclusion, good content need good distribution and a good distribution platform should have good variety of qualitative content. Both distribution and content have to go hand in hand and can not work against each other.
So, is it not right to ask, Is Distribution a really a Multi Headed Demon..?
It takes financial capability and most importantly the “WILL”
Guest Article Authored by VC Bharati – The Author is a veteran Media Professional in South Market with vast experience in the areas of Creative, Project Designing, Strategy and planning for Channel launch with Sound technical knowledge too etc.. He was associated with many leading Media and Broadcast companies during his Journey of three decades at a senior management level and he was instrumental in launch of leading GECs and News Channels in South Market. He can be reached on: firstname.lastname@example.org